Fidelity Retirement Analysis: Balances Improve in Q4 2015; Market Volatility Drives Record Customer Engagement

BOSTON--(BUSINESS WIRE)-- Fidelity Investments^® today released its 401(k) and Individual Retirement Account (IRA) savings analysis¹ for the fourth quarter of 2015, which reveals:

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• 401(k) and IRA account balances increased in Q4 2015, but are down year over year. After decreasing in Q3 2015 due to market volatility, average retirement account balances recovered in Q4 2015, but are still below the averages from Q4 2014.

• Both 401(k) and IRA account holders continued to contribute to their retirement savings accounts. The average IRA contribution was $1,500 in Q4 2015, up from $1,260 in Q3 but down from $1,660 in Q4 2014. The average total 401(k) contribution, which includes both employee and employer contributions, was $2,540 in Q4 2015, down slightly from $2,610 in Q3 but up from $2,440 in Q4 2014. During 2015, employers contributed an average of $3,610 to 401(k) accounts through profit sharing or company match.
• An increasing percentage of retirement assets are in target date funds or managed accounts. As of the end of Q4 2015, 25 percent of total 401(k) assets on Fidelity’s platform were held in target date funds, and two-thirds (67 percent) of Fidelity 401(k) account holders had at least some of their savings in a target date fund. Among Millennials, 63 percent had all of their retirement assets in a target date fund at the end of Q4. The use of Fidelity’s professionally-managed account portfolios continued to increase in 2015, growing by 19 percent² since 2014.

Market Volatility Prompts Unprecedented Engagement from Investors

The recent market volatility drove a record number of people to seek guidance from Fidelity about the impact of market changes on their account balance and steps they should consider. In early January, Fidelity responded to six million customer contacts³ in a single day, one of the busiest days on record.

To help alleviate concerns among savers about market volatility, Fidelity encourages investors to consider the following steps:

• Take a long-term approach to retirement planning. Many people save for retirement for 30 years or more. Fidelity stresses that a retirement savings strategy should take a long-term approach and to stay the course during short-term volatility.
• Don’t try to time the market. Trying to move in and out of the market can hurt an investor’s long-term retirement savings. Fidelity examined⁴ 401(k) investor behavior between 2008 and 2015, and compared people who continued to invest in equities during this period with those who dropped to zero percent equity in their 401(k). Assuming the investors started with a balance of $10,000, the analysis showed that investors who went to zero equities saw their 401(k) balances grow by 74 percent to $17,360, while those who kept a portion of stocks in their 401(k) saw their balance grow almost 150 percent to $24,800.

• Check asset allocation and contribution rate. Retirement savers should have an asset allocation that matches their risk tolerance with the right balance of stocks, bonds and cash to keep them on track to meet long-term goals. Fidelity recommends retirement savers contribute at least to a level where they can take full advantage of their company’s 401(k) match.

“Today’s retirement savers have constant access to detailed market and financial data, which can be unnerving during periods of economic uncertainty and make many investors feel like they have to take action,” said Doug Fisher, senior vice president, Fidelity Investments. “While we understand that it may be tempting to react to recent market volatility, Fidelity’s guidance is to focus on a sound, long-term retirement savings plan. The market will have many peaks and valleys, so having a plan and staying on course puts you in the best position to achieve your financial goals.”

Investors can find additional insights on investing, retirement and managing market volatility at https://www.fidelity.com/viewpoints/overview.

About Fidelity Investments

Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.2 trillion, including managed assets of $2.0 trillion as of December 31, 2015, we focus on meeting the unique needs of a diverse set of customers: helping more than 24 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 42,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

Diversification/asset allocation does not ensure a profit or guarantee against loss.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Fidelity Brokerage Services LLC, Member NYSE, SIPC

900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.

500 Salem St., Smithfield, RI 02917

750576.1.0

© 2016 FMR LLC. All rights reserved.

¹ Analysis based on 21,600 corporate defined contribution plans and 13.5 million participants, as of December 31, 2015. These figures include the advisor-sold market, but excluding the tax-exempt market. Also excluded are non-qualified defined contribution plans and plans for Fidelity’s own employees. Fidelity’s IRA analysis based on 6 million IRA customers.

² Reflects percentage growth in investor accounts across Fidelity’s Portfolio Advisory Services and Portfolio Advisory Services at Work products.

³ Customer contacts through both phone and Internet related to Fidelity’s retirement and employee benefit businesses, including 401(k), IRA and other retirement/benefit-related products, on January 4, 2016.

⁴ Fidelity internal analysis of 401(k) investors’ equity allocation and performance, 9/30/2008 – 12/31/2015. Analysis measures participants who dropped to 0% equity in their 401(k) in Q4 2008 or Q1 2009 vs. participants who did not drop to 0% equity in Q4 2008 or Q1 2009. Results illustrate hypothetical growth of an account with a balance of $10,000 from 9/30/2008 through 12/31/2015.

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Fidelity Investments

Fidelity Corporate Communications, 617-563-5800

or

Mike Shamrell, 617-563-1996

[email protected]

Source: Fidelity Investments